Alon USA Reports First Quarter Results

Contacts:

Claire A. Hart, Senior Vice President

Alon USA Energy, Inc.

972-367-3649

Investors:  Jack Lascar/Sheila Stuewe

DRG&E / 713-529-6600

Media:  Blake Lewis

Lewis Public Relations

214-635-3020

Ruth Sheetrit

SMG Public Relations

011-972-547-555551

-Tables to follow-

ALON USA ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED

EARNINGS RELEASE

RESULTS OF OPERATIONS – FINANCIAL DATA
(ALL INFORMATION IN THIS PRESS RELEASE, EXCEPT FOR BALANCE SHEET DATA AS OF DECEMBER 31, 2009, IS UNAUDITED)

For the Three Months Ended
March 31,

2010

2009

(dollars in thousands,
except per share data)

STATEMENT OF OPERATIONS DATA:

Net sales (1)                                                                         

$  579,313

$  722,180

Operating costs and expenses:

Cost of sales                                                                       

538,715

539,730

Direct operating expenses                                                             

61,444

68,864

Selling, general and administrative expenses (2)                                           

31,807

31,915

Depreciation and amortization (3)                                                       

26,322

22,090

Total operating costs and expenses                                                   

658,288

662,599

Operating income (loss)                                                                 

(78,975)

59,581

Interest expense (4)                                                                   

(26,585)

(28,256)

Equity losses of investees                                                               

(103)

(3)

Other income, net (5)                                                                   

14,204

257

Income (loss) before income tax expense (benefit), non-controlling interest in income (loss) of subsidiaries and accumulated dividends on preferred stock of subsidiary

(91,459)

31,579

Income tax expense (benefit)                                                            

(34,713)

10,995

Income (loss) before non-controlling interest in income (loss) of subsidiaries and accumulated dividends on preferred stock of subsidiary

(56,746)

20,584

Non-controlling interest in income (loss) of subsidiaries                                       

(3,804)

1,083

Accumulated dividends on preferred stock of subsidiary                                       

—

2,150

Net income (loss) available to common stockholders                                          

$  (52,942)

$  17,351

Earnings (loss) per share, basic and diluted                                                 

$  (0.98)

$  0.37

Weighted average shares outstanding, basic (in thousands)                                   

54,161

46,806

Cash dividends per share                                                               

$  0.04

$  0.04

CASH FLOW DATA:

Net cash provided by (used in):

Operating activities                                                                  

$  (40,979)

$  119,527

Investing activities                                                                   

(6,331)

(15,009)

Financing activities                                                                   

14,433

(104,679)

OTHER DATA:

Adjusted net income (loss) available to common stockholders (6)                                

$  (49,068)

$  19,347

Earnings (loss) per share, excluding write-off of unamortized debt issuance costs, net of tax, and accumulated dividends on preferred stock of subsidiary (6)

$  (0.91)

$  0.41

Adjusted EBITDA (7)                                                                   

(38,552)

81,925

Capital expenditures (8)                                                                 

7,303

10,357

Capital expenditures to rebuild the Big Spring refinery                                         

—

32,135

Capital expenditures for turnaround and chemical catalyst                                     

10,009

7,363

March 31,
2010

December 31,

2009

BALANCE SHEET DATA (end of period):

Cash and cash equivalents                                                               

$  7,560

$  40,437

Working capital                                                                         

29,198

84,257

Total assets                                                                           

2,083,646

2,132,789

Total debt                                                                             

954,616

937,024

Total equity                                                                            

377,055

431,918

REFINING AND UNBRANDED MARKETING SEGMENT

For the Three Months Ended
March 31,

2010

2009

(dollars in thousands, except per barrel data and pricing statistics)

STATEMENTS OF OPERATIONS DATA:

Net sales (9)                                                           

$  483,040

$  633,297

Operating costs and expenses:

Cost of sales                                                        

463,864

469,363

Direct operating expenses                                              

50,352

58,371

Selling, general and administrative expenses                               

6,388

7,327

Depreciation and amortization                                           

20,954

16,877

Total operating costs and expenses                                    

541,558

551,938

Operating income (loss)                                                  

$  (58,518)

$  81,359

KEY OPERATING STATISTICS:

Total unbranded sales volume (bpd)                                         

36,280

122,459

Per barrel of throughput:

Refinery operating margin – Big Spring (10)                                 

$  4.91

$  13.63

Refinery operating margin – CA Refineries (10)                             

(0.42)

1.21

Refinery operating margin – Krotz Springs (10)                             

N/A

13.19

Refinery direct operating expenses – Big Spring (11)                         

6.57

3.60

Refinery direct operating expenses – CA Refineries (11)                     

8.82

5.84

Refinery direct operating expenses – Krotz Springs (11)                      

N/A

4.63

Capital expenditures                                                     

$  6,312

$  9,398

Capital expenditures to rebuild Big Spring refinery                             

—

32,135

Capital expenditures for turnaround and chemical catalyst                       

10,009

7,363

PRICING STATISTICS:

WTI crude oil (per barrel)                                                 

$  78.75

$  43.10

WTS crude oil (per barrel)                                                 

76.87

42.16

MAYA crude oil (per barrel)                                               

69.84

38.58

Crack spreads (3/2/1) (per barrel):

Gulf Coast (12)                                                       

$  7.09

$  9.65

Group III (12)                                                         

6.75

9.72

West Coast (12)                                                      

10.12

17.92

Crack spreads (6/1/2/3) (per barrel):

West Coast (12)                                                      

$  1.45

$  6.21

Crack spreads (2/1/1) (per barrel):

Gulf Coast high sulfur diesel (12)                                         

$  6.25

$  9.48

Crude oil differentials (per barrel):

WTI less WTS (13)                                                    

$  1.88

$  0.94

WTI less MAYA (13)                                                   

8.91

4.52

Product price (dollars per gallon):

Gulf Coast unleaded gasoline                                           

$  2.040

$  1.218

Gulf Coast ultra low-sulfur diesel                                         

2.052

1.331

Gulf Coast high sulfur diesel                                             

2.008

1.285

Group III unleaded gasoline                                             

2.036

1.232

Group III ultra low-sulfur diesel                                           

2.035

1.309

West Coast LA CARBOB (unleaded gasoline)                               

2.136

1.505

West Coast LA ultra low-sulfur diesel                                     

2.076

1.349

Natural gas (per MMBTU)                                               

$  4.99

$  4.47

THROUGHPUT AND YIELD DATA:
BIG SPRING

For the Three Months Ended
March 31,

2010

2009

bpd

%

bpd

%

Refinery throughput:

Sour crude                                               

35,978

84.1

55,452

86.1

Sweet crude                                             

5,258

12.3

7,864

12.2

Blendstocks                                              

1,548

3.6

1,101

1.7

Total refinery throughput (14)                                  

42,784

100.0

64,417

100.0

Refinery production:

Gasoline                                                 

20,618

48.9

28,265

44.9

Diesel/jet                                                 

13,743

32.6

21,737

34.5

Asphalt                                                  

2,359

5.6

5,228

8.3

Petrochemicals                                            

2,021

4.8

3,026

4.8

Other                                                   

3,396

8.1

4,672

7.5

Total refinery production (15)                                   

42,137

100.0

62,928

100.0

Refinery utilization (16)                                       

64.8%

90.5%

THROUGHPUT AND YIELD DATA:
CALIFORNIA REFINERIES

For the Three Months Ended
March 31,

2010

2009

bpd

%

bpd

%

Refinery throughput:

Sour crude                                               

4,106

22.5

12,225

42.5

Heavy crude                                             

13,740

75.2

16,498

57.4

Blendstocks                                              

417

2.3

38

0.1

Total refinery throughput (14)                                  

18,263

100.0

28,761

100.0

Refinery production:

Gasoline                                                 

2,469

14.0

3,266

11.5

Diesel/jet                                                 

3,370

19.1

6,215

22.0

Asphalt                                                  

6,163

34.9

8,735

30.9

Light unfinished                                           

—

—

1,909

6.7

Heavy unfinished                                          

5,259

29.8

7,796

27.6

Other                                                   

393

2.2

370

1.3

Total refinery production (15)                                   

17,654

100.0

28,291

100.0

Refinery utilization (16)                                       

24.6%

58.5%

THROUGHPUT AND YIELD DATA:
KROTZ SPRINGS

For the Three Months Ended
March 31,

2010

2009

bpd

%

bpd

%

Refinery throughput:

Light sweet crude                                         

—

—

27,423

51.1

Heavy sweet crude                                        

—

—

20,083

37.4

Blendstocks                                              

—

—

6,206

11.5

Total refinery throughput (14)                                  

—

—

53,712

100.0

Refinery production:

Gasoline                                                 

—

—

24,449

44.7

Diesel/jet                                                 

—

—

24,468

44.7

Heavy oils                                               

—

—

887

1.6

Other                                                   

—

—

4,885

9.0

Total refinery production (15)                                   

—

—

54,689

100.0

Refinery utilization (16)                                       

N/A

57.2%

ASPHALT SEGMENT

For the Three Months Ended
March 31,

2010

2009

(dollars in thousands,
except per ton data)

STATEMENTS OF OPERATIONS DATA:

Net sales                                                                  

$  67,141

$  50,760

Operating costs and expenses:

 Cost of sales (17)                                                         

71,445

60,233

 Direct operating expenses                                                  

11,092

10,493

 Selling, general and administrative expenses                                   

1,066

1,154

 Depreciation and amortization                                               

1,717

1,698

   Total operating costs and expenses                                        

85,320

73,578

Operating loss                                                              

$  (18,179)

$  (22,818)

KEY OPERATING STATISTICS:

Blended asphalt sales volume (tons in thousands) (18)                              

129

147

Non-blended asphalt sales volume (tons in thousands) (19)                          

22

37

Blended asphalt sales price per ton (18)                                         

$  463.53

$  314.16

Non-blended asphalt sales price per ton (19)                                      

$  333.82

$  123.73

Asphalt margin per ton (20)                                                   

$  (28.50)

$  (51.48)

Capital expenditures                                                         

$  179

$  162

RETAIL AND BRANDED MARKETING SEGMENT

For the Three Months Ended
March 31,

2010

2009

(dollars in thousands,
except per gallon data)

STATEMENTS OF OPERATIONS DATA:

Net sales (1)                                                               

$  226,028

$  167,470

Operating costs and expenses:

 Cost of sales (17)                                                         

200,302

139,481

 Selling, general and administrative expenses                                   

24,165

23,244

 Depreciation and amortization                                               

3,420

3,368

   Total operating costs and expenses                                       

227,887

166,093

Operating income (loss)                                                       

$  (1,859)

$  1,377

KEY OPERATING STATISTICS:

Branded fuel sales (thousands of gallons) (21)                                    

70,469

66,792

Branded fuel margin (cents per gallon) (21)                                       

4.2

5.6

Number of stores (end of period)                                               

308

306

Retail fuel sales (thousands of gallons)                                          

32,714

28,283

Retail fuel sales (thousands of gallons per site per month)                           

35

31

Retail fuel margin (cents per gallon) (22)                                         

9.0

14.2

Retail fuel sales price (dollars per gallon) (23)                                     

$  2.63

$  1.87

Merchandise sales                                                           

$  63,482

$  63,053

Merchandise sales (per site per month)                                          

69

69

Merchandise margin (24)                                                     

30.0%

31.7%

Capital expenditures                                                         

$  397

$  219

(1) Includes excise taxes on sales by the retail and branded marketing segment of $12,786 and $11,044 for the three months ended March 31, 2010 and 2009, respectively.  Net sales also include royalty and related net credit card fees of $773 and $266 for the three months ended March 31, 2010 and 2009, respectively.

(2) Includes corporate headquarters selling, general and administrative expenses of $188 and $190 for the three months ended March 31, 2010 and 2009, respectively, which are not allocated to our three operating segments.

(3) Includes corporate depreciation and amortization of $231 and $147 for the three months ended March 31, 2010 and 2009, respectively, which are not allocated to our three operating segments.

(4) Interest expense of $26,585 for the three months ended March 31, 2010, includes a charge of $6,659 for the write-off of debt issuance costs associated with our prepayment of the Alon Refining Krotz Springs, Inc. revolving credit facility. Interest expense of $28,256 for the three months ended March 31, 2009 includes $5,715 related to the unwind of the heating oil crack spread hedge at the Krotz Springs refinery.

(5) In the first quarter of 2010, Alon sold approximately two thirds of its investment in Holly Energy Partners for $22,760, resulting in a gain of $8,047.  Subsequently, Alon marked-to-market its remaining investment, resulting in an unrealized gain of $6,291.

(6) The following table provides a reconciliation of net income (loss) available to common stockholders under United States generally accepted accounting principles ("GAAP") to adjusted net income (loss) available to common stockholders utilized in determining earnings (loss) per common share, excluding after-tax loss on write-off of unamortized debt issuance costs and accumulated dividends on preferred stock of subsidiary.  Our management believes that the presentation of adjusted net income (loss) available to common stockholders and earnings (loss) per common share, excluding these items, is useful to investors because it provides a more meaningful measurement for evaluation of our Company's operating results.

For the Three Months Ended
March 31,

2010

2009

(dollars in thousands,

except per share data)

Net income (loss) available to common stockholders                   

$  (52,942)

$  17,351

Plus:  Write-off of unamortized debt issuance costs, net of tax       

3,874

—

Plus:  Accumulated dividends on preferred stock of subsidiary       

—

1,996

Adjusted net income (loss) available to common stockholders           

$  (49,068)

$  19,347

Weighted average shares outstanding (in thousands)                 

54,161

46,806

Earnings (loss) per share, excluding write-off of unamortized debt issuance costs, net of tax, and accumulated dividends on preferred stock of subsidiary

$  (0.91)

$  0.41

(7) Adjusted EBITDA represents earnings before non-controlling interest in income of subsidiaries, income tax expense, interest expense, depreciation and amortization and gain on disposition of assets.  Adjusted EBITDA is not a recognized measurement under GAAP; however, the amounts included in Adjusted EBITDA are derived from amounts included in our consolidated financial statements.  Our management believes that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry.  In addition, our management believes that Adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of Adjusted EBITDA generally eliminates the effects of non-controlling interest in income of subsidiaries, income tax expense, interest expense, gain on disposition of assets and the accounting effects of capital expenditures and acquisitions, items that may vary for different companies for reasons unrelated to overall operating performance.  

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP.  Some of these limitations are:

• Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

• Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;

• Adjusted EBITDA does not reflect the prior claim that non-controlling interest has on the income generated by non-wholly-owned subsidiaries;

• Adjusted EBITDA does not reflect changes in or cash requirements for our working capital needs; and

• Our calculation of Adjusted EBITDA may differ from EBITDA calculations of other companies in our industry, limiting its usefulness as a comparative measure.

For the Three Months Ended
March 31,

2010

2009

(dollars in thousands)

Net income (loss) available to common stockholders                 

$  (52,942)

$  17,351

Non-controlling interest in income (loss) of subsidiaries (including accumulated dividends on preferred stock of subsidiary)

(3,804)

3,233

Income tax expense (benefit)                                   

(34,713)

10,995

Interest expense                                             

26,585

28,256

Depreciation and amortization                                   

26,322

22,090

Adjusted EBITDA                                             

$  (38,552)

$  81,925

(8) Includes corporate capital expenditures of $415 and $578 for the three months ended March 31, 2010 and 2009, respectively, which are not allocated to our three operating segments.

(9) Net sales include intersegment sales to our asphalt and retail and branded marketing segments at prices which approximate wholesale market price.  These intersegment sales are eliminated through consolidation of our financial statements.  

(10) Refinery operating margin is a per barrel measurement calculated by dividing the margin between net sales and cost of sales (exclusive of substantial unrealized hedge positions) attributable to each refinery by the refinery's throughput volumes. Industry-wide refining results are driven and measured by the margins between refined product prices and the prices for crude oil, which are referred to as crack spreads. We compare our refinery operating margins to these crack spreads to assess our operating performance relative to other participants in our industry. There were unrealized hedging gains of $18,026 for the Krotz Springs refinery for the three months ended March 31, 2009.

(11) Refinery direct operating expense is a per barrel measurement calculated by dividing direct operating expenses at our Big Spring, California, and Krotz Springs refineries, exclusive of depreciation and amortization, by the applicable refinery's total throughput volumes.

(12) A 3/2/1 crack spread in a given region is calculated assuming that three barrels of a benchmark crude oil are converted, or cracked, into two barrels of gasoline and one barrel of diesel.  We calculate the Gulf Coast 3/2/1 crack spread using the market values of Gulf Coast conventional gasoline and ultra low-sulfur diesel and the market value of West Texas Intermediate, or WTI, a light sweet crude oil.  We calculate the Group III 3/2/1 crack spread using the market values of Group III conventional gasoline and ultra low-sulfur diesel and the market value of WTI crude oil.  We calculate the West Coast 3/2/1 crack spread using the market values of West Coast LA CARBOB pipeline gasoline and LA ultra low-sulfur pipeline diesel and the market value of WTI crude oil. A 6/1/2/3 crack spread is calculated assuming that six barrels of a benchmark crude oil are converted, or cracked, into one barrel of gasoline, two barrels of diesel and three barrels of fuel oil. We calculate the West Coast 6/1/2/3 crack spread using the market values of West Coast LA CARBOB pipeline gasoline, LA ultra low-sulfur pipeline diesel, LA 380 pipeline CST (fuel oil) and the market value of WTI crude oil.  A 2/1/1 crack spread in a given region is calculated assuming that two barrels of a benchmark crude oil are converted, or cracked, into one barrel of gasoline and one barrel of diesel.  We calculate the Gulf Coast 2/1/1 crack spread using the market values of Gulf Coast conventional gasoline and high sulfur diesel and the market value of WTI crude oil.  

(13) The WTI/WTS, or sweet/sour, spread represents the differential between the average value per barrel of WTI crude oil and the average value per barrel of WTS crude oil.  The WTI/Maya, or light/heavy, spread represents the differential between the average value per barrel of WTI crude oil and the average value per barrel of Maya crude oil.

(14) Total refinery throughput represents the total barrels per day of crude oil and blendstock inputs in the refinery production process.

(15) Total refinery production represents the barrels per day of various products produced from processing crude and other refinery feedstocks through the crude units and other conversion units at the refinery.

(16) Refinery utilization represents average daily crude oil throughput divided by crude oil capacity, excluding planned periods of downtime for maintenance and turnarounds.

(17) Cost of sales includes intersegment purchases of asphalt blends and motor fuels from our refining and unbranded marketing segment at prices which approximate wholesale market prices. These intersegment purchases are eliminated through consolidation of our financial statements.

(18) Blended asphalt represents base asphalt that has been blended with other materials necessary to sell the asphalt as a finished product.

(19) Non-blended asphalt represents base material asphalt and other components that require additional blending before being sold as a finished product.

(20) Asphalt margin is a per ton measurement calculated by dividing the margin between net sales and cost of sales by the total sales volume.  Asphalt margins are used in the asphalt industry to measure operating results related to asphalt sales.

(21) Marketing sales volume represents branded fuel sales to our wholesale marketing customers that are primarily supplied by the Big Spring refinery. The branded fuels that are not supplied by the Big Spring refinery are obtained from third-party suppliers. The marketing margin represents the margin between the net sales and cost of sales attributable to our branded fuel sales volume, expressed on a cents-per-gallon basis.

(22) Retail fuel margin represents the difference between motor fuel sales revenue and the net cost of purchased motor fuel, including transportation costs and associated motor fuel taxes, expressed on a cents-per-gallon basis. Motor fuel margins are frequently used in the retail industry to measure operating results related to motor fuel sales.

(23) Retail fuel sales price per gallon represents the average sales price for motor fuels sold through our retail convenience stores.

(24) Merchandise margin represents the difference between merchandise sales revenues and the delivered cost of merchandise purchases, net of rebates and commissions, expressed as a percentage of merchandise sales revenues.  Merchandise margins, also referred to as in-store margins, are commonly used in the retail convenience store industry to measure in-store, or non-fuel, operating results.